Well October numbers are in – and look at the plunge in Notices of Default! 13 total NODs for the month. That is a 98% decrease in one month. Notices of Sale increased a little more than 7 percent over September’s number. I expect, given the ramp up in NOD filings in the months preceding the October 1st effective date of AB 284, that we’ll see increases in Notices of Sale over the next three months or so, and then because NOD filings have dropped off a cliff, Notices of Sales will drop off as well.
Trustees Sales continue to fall, hitting a 20-month low. To see all the numbers click on the chart below.
Thank you to our friends at Ticor Title for this data.
Related post: Nevada NODs grind to a halt
To hear one real estate agent’s take on the potentially “devastating repercussions” of the passage of AB 284, check out this video below from Bryan Lebo of The Lebo Group in Las Vegas. This is a well done and insightful video and worth the nine minutes of your time. [Note: the market numbers that Mr. Lebo quotes in his video are for the Las Vegas (Clark County) market, however the percentages and timeframes he mentions could certainly apply here in Washoe County.]
If Mr. Lebo’s predictions are correct, 2012 will be a frenzied year, with home buyers scrambling to pick up the little remaining inventory.
UPDATE November 3, 2011 – Ticor sent over a new chart showing the number of single-family residence REO listings hitting the market (click on the chart below). Note that the 148 new REO listings that came on the market in October represent an 18 percent decrease from September and a 33 percent decrease from August. This number will be interesting to watch over the next few months.
Abbot
I agree with Mr. Lebo. There is no good news in AB 284 for the real estate market. Just because we run out of $150K houses for sale, does not mean that people are going to suddenly be able to afford $250K houses.
Realtors would be wise to heed Mr. Lebo’s advice to pack away some money for the coming months. 2012 may see a vastly reduced sales volume once the impact of this legislation starts to be felt in about 4-5 months. Realtors who have been making a living selling 3 $150K houses a month are not going to have an easy time finding that 1 $450K house to sell to generate the same income.
Guy Johnson
Another thing to consider, if the inventory of available houses drops as predicted, then builders may ramp up new construction. For example, New Wingfield Springs Subdivision Gets Approval
Matthew
Government makes foreclosing on non-payers more difficult, short-term NOD’s decrease… color me surprised.
It’s a mask of the problem, nothing more. NOD’s were not high because of a wave of erroneous foreclosures.
bob_c
reno needs no new homes
Guy Johnson
I’ve added a new chart above showing the number of REO listings.
Paul
Given this new law, why would ANYONE with no or negative equity continue making payments on their house or investment property? And, given that it basically impairs the security of the lenders, who will continue to lend in Nevada? Do federal redlining statutes offer protection against making mortgages unavailable here?
Guy Johnson
The Wall Street Journal has picked up the story; see Nevada Foreclosure Filings Dry Up After ‘Robo-Signing’ Law
John Newell
Paul,
I do not see AB 284 as hindering new loans. As long as each transfer of interest and each substitution of trustee is recorded in the proper county, and as long as the lender or the successor in interest either actually or constructively possesses the note at the time a NOD is issued, then there is no impairment to the lender’s (or successor’s in interest) security interest.
However, I am concerned that you are correct regarding the effect this will have on existing deeds of trust. In my view, AB 284 made strategic default much more attractive to debtors. Why not take the chance that the lender, or more commonly the successor in interest, cannot provide the required documentation. And when faced with approving low-ball short sales or pursing an expensive judicial foreclosure, I expect that the note holders will approve almost any short sale if the buyer has financing. I would not be surprised if we see a sharp increase in approved short sales if providing the required documentation turns out to be overly onerous.
GratefulD_420
I’m really interested who originated or backed this bill?
The Banks, The RE industry, The Politician for a vote? The people?
ohh wait, laws are never written for the people, by the people. Are they?
I truly don’t know. My bet is the Real Estate industry wrote it and backed it thinking it would push up prices. Well thought!!
Good news… if ‘ol Lebo’s predictions are correct the RE will be our best and most positioned advocate to help overturn or at least reword the bill. I’m certain the intent was not to stop banks (mortgagors, lenders and businessmen) from due process based on technicalities just to “help out,” non-paying mortgagees. This will be destruction of a large industry at the expense of those who don’t pay? Just what Nevada needs. Unbelievable.
Then again………… election year is heating up!
p.s. Goggle the minutes for this bill’s 1’st hearing… they are laughable. “I’m here to present this bill that I am promoting, but I can’t discuss the details because they are too technical for any of us to understand,” Nevertheless I support it. Somebody who put a lot of money in my coffers told me it was good (and they helped me write it).
Dixon
This legislation was initiated by the “consumer protection” industry, the legal aid organizations, primarily the legal aid organization in Las Vegas headed by former Democratic Speaker Barbara Buckley, with strong support from Democratic Attorney General Masto. There was some input into the bill by the “foreclosure industry” (for lack of a better term) but not much.
For a while Governor Sandoval had signaled his intention to veto the bill. In the end, however, he signed it.
My belief is that this bill will ultimately prove to be a poster child for unintended consequences, and that the law will be revised considerably at the next session of the Legislature. Unfortunately, that is not until February of 2013.
John DeMarco
Who else would craft a bill like this, lawyers of course. The 99% declination in NOD’s will cripple the housing market in March / April of next year. The properties being sold at the auction right now went into default over 7 months ago. Now, due to AB 284 and the exposure with signing the mandatory affidavit stating the signor has “personal knowledge” there will be no new NOD’s recorded until the affidavit is amended, which may take an act of God considering the resources spent in getting such a bill through to begin with, so if you haven’t had an NOD filed on your property, you are good shape for at least the next 18 months, Merry Christmas. If there were significant issues with the foreclosure process the title insurers that insure every subsequent transaction would have stopped insuring transactions due to excessive losses. There have been less than .05% losses due to invalid Foreclosure’s. Last year at this time when the robo-signing hit news etc. and the banks halted the NOD’s, they addressed the issues for the most part. Regardless of whether every T is crossed and/or I is dotted, the borrower knew and agreed to four undisputed facts: 1. Their payment amount 2. Their interest rate 3. The loan term and 4. If you don’t make your payments, you are going to get foreclosed on, period. I’m not condoning the banks by no means; however, two wrongs don’t make a right. Our Government does far worse things all the time, try not paying your taxes and see what happens. AB 284 wasn’t necessary and overreached by mile. The unintentional consequences will further delay our recovery, cost jobs and create a false positive with our economy. People will be spending money alright, but what happens when reality hits that you actually have to pay either rent or a mortgage payment to live. Ouch!!! That will slow down the Target and Costco runs.
Stallworth
This was a “feel good” piece of legislation aimed at punishing the big bad banks and helping the small struggling worker. It reality, it is solving a problem that does not exist. I am still waiting to hear about even ONE case here in Washoe County where the purchaser of a property at foreclosure has had his purchase invalidated because of a defective title.
Nobody these days, including me, is standing up for poor little Bank of America or Wells Fargo. They are greedy to the core. But this legislation is going to simply delay the housing market from finally cleansing itself and recovering. Now we are going to have perhaps a year and a half delay while deadbeats (sorry if the truth hurts) live free in the house they promised to pay for but are not. Everybody who was hoping for the market to FINALLY process out all the deadweight and begin to recover has to be sadly disappointed. Unintended consequences indeed.
Ralston
I can see it now. The following story in the RGJ in February 2013:
“State Senator Joe Blow today introduced legislation intended to make it easier for lenders to get delinquent borrowers out of houses they have stopped paying their mortgage on. ‘It’s a real problem’, said Blow, ‘ there are people who have been basically squatting in houses they purchased and agreed to pay for, but are not paying for. Some of these people have been living for free for more than 2 or 3 years’. According to Blow, the problem stems from a law passed 2 years ago that makes it very difficult for lenders to foreclose on people who have defaulted on their loans. ‘It was a well-meaning piece of legislation’ says Blow, ‘but it has resulted in preventing banks from removing people who have stopped paying their mortgage. There are thousands and thousands of people who are living in houses they are not paying for. All this is going to do is clog up the market with thousands of foreclosed houses once the banks are finally allowed to remove defaulting borrowers. This is just going to delay the housing market from recovering. I think that the Legislature has an obligation to the people of the State of Nevada to do whatever it can to promote the market’s recovery’.
The housing market in Washoe County is now in its eigth consecutive year of declines since the bubble burst in January 0f 2006.”
skeptical
The Nevada attorney general has indicted two midlevel staffers at a mortgage document company, Lender Processing Services, on a whopping 606 counts of felony and gross misdemeanor for directing employees to forge signatures and falsely notarize documents used to illegally foreclose on Nevada homeowners.
The Nevada attorney general has indicted two midlevel staffers at a mortgage document company, Lender Processing Services, on a whopping 606 counts of felony and gross misdemeanor for directing employees to forge signatures and falsely notarize documents used to illegally foreclose on Nevada homeowners.
http://www.huffingtonpost.com/2011/11/17/foreclosure-fraud-nevada-criminal-case-robo-signing-mortgages_n_1099701.html
It’s always “mid-level staffers”, never the CEO. Still, it’s about damn time.
Esq.
So there are Larry and Curly. Where’s Moe, the third Stooge? Surely there must a third Stooge somewhere in that company. Let’s indict the Stooges. Let’s show how much we care about the working people of Nevada.
Neither of these Stooges will serve a day of time. Cop to gross misdemeanors. Maybe a felony plea on condition of probation and no time. Say you are sorry. Leave the industry. Life goes on.